CEE MARKETS 2-FX regain ground with forint in lead, crown lags

                                
 * Czech CPI raises easing question
                                
 * Zloty, forint outperform, stocks mixed
                                
 * IMF wraps up Romania mission
                                
 
  (Adds details, bonds)
                                
 By Jason Hovet
                                
 PRAGUE, Aug 10 (Reuters) - Renewed risk taking among
investors lifted the Polish zloty and Hungarian forint on
Monday, although the Czech crown lagged central Europe's gains
after a larger than expected drop in inflation.
                                
 In Romania, the leu <EURRON=> was down a touch as investors
paused before an International Monetary Fund press conference at
1030 GMT on its assessment of the Balkan state's progress with
its 20 billion euro aid package.
                                
 Markets widely expect the Fund to allow Romania to widen its
budget gap to around 7 percent of gross domestic product, the
latest IMF-aided country to need rules relaxed as the region's
economic slide takes a toll on government income. [ID:nL7127335]
                                
 "Market players may be watching out for IMF comments later
in the day. Anyway, people expect the IMF to have accepted the
government's proposals, so it would be interesting to see what
is new in their comments," said a dealer in Bucharest.
                                
 The forint <EURHUF=> led gains with a 0.5 percent rise by
0920 GMT, as the region's currencies returned to stronger levels
after U.S. data on Friday showed job losses slowing, dealers
said.
                                
 The zloty <EURPLN=> firmed 0.4 percent to 4.101 per euro,
returning near its highest levels since January.
                                
 In the Czech Republic, where interest rates were cut last
week to a new low of 1.25 percent, the crown <EURCZK=> added 0.3
percent to 25.759 to the euro, underperforming after slowing
inflation brought prospects of further easing. [ID:nL797796]
                                
 "The message in our view is that more CNB (central bank)
rate cuts lie ahead, especially with the crown the clear
outperformer," Cheuvreux analyst Simon Quijano-Evans said.
                                
 However, he remained overweight on Czech equities due to the
country's strong policymaking and lower indebtedness. Czech
stocks were steady on Monday, while Budapest <.BUX> was up 2
percent and Warsaw's blue-chip index <.WIG20> dipped.
                                
 Polish bonds steadied before details of a 5-year sale this
week are released at 1000 GMT.
                                
 
                                
 WEIGHING BETS
                                
 Poland's better fundamentals and Hungary's higher yields
meant the zloty and forint benefited the most from growing
confidence in an economic recovery.
                                
 The zloty, picked by analysts in a Reuters poll last week to
outperform peers in the months ahead [ID:nL5168081], has swung
the most in the past year, at one point losing a third of its
value.
                                
 But Poland has avoided the economic contractions that have
gripped its neighbours, and the zloty has risen 6 percent since
July 1 while the forint, crown and Romania leu <EURRON=> are
flat. 
                                
 "The technical picture points towards a euro/zloty move
below 4, which would certainly not be unrealistic if the
positive global sentiment continues in the coming days," Danske
Bank analysts said in a morning note.
                                
 In Hungary, where interest rates stand at 8.5 percent even
after a larger than expected 100 basis point cut two weeks ago,
the higher yield has aided assets in the summer risk rally, and
debt funds are favouring the market to peers. [ID:nL6354636]
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   25.759   25.84   +0.31%   +3.86%
Polish zloty     <EURPLN=>    4.101    4.119  +0.44%   +0.34%
Hungarian forint <EURHUF=>  268.38   269.73   +0.5%    -1.8%
Croatian kuna    <EURHRK=>    7.32     7.333  +0.18%   +0.61%
Romanian leu     <EURRON=>    4.206    4.203  -0.07%   -4.56%
Serbian dinar    <EURRSD=>   93.466   93.27   -0.21%   -4.26%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +9 basis points to  116bps over bmk*
4-yr T-bond   CZ4YT=RR    -38 basis points to  +108bps over bmk*
8-yr T-bond   CZ8YT=RR   +3 basis points to  +241bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +3 basis points to  +332bps over bmk*
5-yr T-bond   PL5YT=RR   +6 basis points to  +276bps over bmk*
10-yr T-bond PL10YT=RR   +3 basis points to  +254bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +1 basis points to  +658bps over bmk*
5-yr T-bond   HU5YT=RR   +3 basis points to  +594bps over bmk*
10-yr T-bond   HU10YT=RR  0 basis points to  +513bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1123 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)